Sharon Negele: Credit card competition act deserves lawmaker support

Despite a multimillion-dollar campaign by the credit card industry to discredit the federal Credit Card Competition Act, the bill would bring relief to small businesses and consumers struggling under excessive credit card swipe fees. The pushback makes sense: Americans pay the highest swipe-fee rates in the world, costing the average family $1,100 a year. These fees are draining Indiana businesses and consumers of their hard-earned money. Considering U.S. Sens. Mike Braun’s and Todd Young’s pro-business records, I hope they will support this bill to address these excessive credit card swipe fees.

Swipe fees are the fees charged to any company processing a credit card transaction, and while they might not sound like much, they become costly quickly, accounting for some businesses’ second-highest operating expense. This is money that could be better spent lowering prices for consumers, giving raises to employees and making investments for business growth. Instead, merchants are forced to funnel this money to Wall Street.

These fees come from two of America’s biggest credit card companies, Visa and Mastercard, dominating more than 80% of the market share. These companies have used their outsized power to cash in on small businesses, tripling the cost of swipe fees over the last decade. Just last year, they took in more than $100 billion in credit card swipe fees for the first time ever. Hoosier businesses alone paid more than $1.8 billion in swipe fees, underscoring the need to reduce fees and keep more money in our local economy.

The bill does not weaken security or remove rewards for consumers but provides the needed competition to the current duopoly. Rewards are determined by banks, not networks, and are used as a marketing tool. The bill requires that credit cards be able to be routed over at least two unaffiliated networks. You could continue to use Visa or Mastercard and use a second network that is currently trusted by banks and consumers. This legislation also blocks networks supported by foreign governments like China’s UnionPay. We also know that competition creates healthy innovation when it comes to security.

As a small-business owner, I have to compete for my customers. The lack of competition and lack of transparency in the credit card business creates an environment of uncertainty for business owners, and we are forced to raise prices to absorb fee increases. These fees are effectively a tax on commerce, which adds to inflation for Indiana consumers. It’s critical that lawmakers work to reduce costs wherever they can. This is why Congress must pass the CCCA and provide some relief to ordinary Americans.

Under this bipartisan, sensible legislation, business owners would be ensured the freedom to choose, which would mean more competition and would encourage credit card companies to lower their swipe fees to appeal to more customers. More competition also means more savings for small businesses and consumers as estimates predict the act would save Indiana merchants nearly $300 million a year.

The CCCA is good for both businesses and consumers—and it’s critical the market is fair. That can happen only if Visa and Mastercard experience real competition, and that’s exactly what the CCCA will do. I hope Congress heeds the concerns of voters and passes the bill this year.•

__________

Negele is a Republican representing District 13 in the Indiana House of Representatives and the owner of Wolf’s Fine Handmade Chocolates in Attica and West Lafayette.